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TMI Blog1981 (9) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains. The matter went up to the Tribunal. The Tribunal in its order disposed of the matter, relying on its earlier order dated March 21, 1975. Therefore, it would be appropriate to refer to that order of March 21, 1975, which begins at p. 33 of the paper book wherein the Tribunal after considering the rival contentions observed as follows : " We have considered the rival submissions. The assessee was allotted loom hours in both the years on account of its owning looms and the allotment of the loom hours did not cost anything to the assessee. Even the ITO has taken the cost of loom hours at nil and has held that the loom hours sold were out of the current allotment. The facts of the case reported in 76 ITR 566 (CIT v. Chunilal Prabhudas Co.) were that the assessee was a registered firm of six partners deriving income from import and export business. Its head office was in Calcutta and it had branches in Bombay. On the last day of the accounting year the assessee transferred its assets and liabilities and also the goodwill of its Calcutta business to private limited company, C. P. Co., Calcutta (P.) Ltd. and the assets and liabilities and the goodwill of its Bombay busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the present appeal had come up before this court in Income-tax Reference No. 108 of 1976, and on 24 February, 1981, that matter was disposed of. The judgment does not indicate that the matter was gone into in detail, but its observation is that in the case of Empire Jule Co. Ltd. v. CIT [1980] 124 ITR 1, the Supreme Court has held that the receipt from sale of " loom hours " is receipt in the nature of revenue receipts. In that view of the matter, the Tribunal could dispose of the appeal before it taking into consideration the decision of the Supreme court. On behalf of the Revenue it was stressed that the Supreme Court in the case of CIT v. Maheshwari Devi Jule Mills Ltd. [1965] 57 ITR 36, has held that loom hours were capital assets. Therefore, in view of that decision, it was argued that the decision has not been varied and if there were capital assets then the sale of such capital asset would be attributed to capital gains. This question directly fell for consideration before the Supreme Court in the case of Empire jute Co. Ltd. v. CIT [1980] 124 ITR 1. There, the Supreme Court held that the payment of Rs. 2,03,255 made by the assessee for purchase of loom hours represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersonally or by letting it out to somebody else. " This principle supported as it was by numerous decisions, was accepted by the court as a valid principle, but it was pointed out that it bad no application in the case before the court, because though loom hours were an asset, they could not from their very nature be let out while retaining property in them and there could be no grant of temporary right to use them. The Court, therefore, concluded that this was really a case of sale of loom hours and not of exploitation of loom hours by permitting user, while retaining ownership and, in the circumstances, the amount received by the assessee from sale of loom hours was liable to be regarded as capital receipt and not income. It will thus be seen that the entire case proceeded on the commonly accepted basis that loom hours were an asset and the only issue debated was whether the transaction in question constituted sale of this asset or it represented merely exploitation of the asset by permitting its user by another while retaining ownership. No question was raised before the court as to whether loom hours were an asset at all nor was any argument advanced as to what was the true nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise, one would be driven to conclude that while a certain income seems to fall within the charging section there is no scheme of computation for quantifying it. The legislative pattern discernible in the Act is against such a conclusion. It must be borne in mind that the legislative intent is presumed to run uniformly through the entire conspectus of provisions pertaining to each head of income. No doubt there is a qualitative difference between the charging provision and a computation provision. And ordinarily the operation of the charging provision cannot be affected by the construction of a particular computation provision. But the question here is whether it is possible to apply the computation provision at all if a certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computation provisions pertaining to capital gains. It is possible to say that the 'cost of acquisition' mentioned in s. 48 implies a date of acquisition, and that inference is strengthened by the provisions of ss. 49 and 50 as well as sub-s. (2) of s. 55. It may also be noted that if the goodwill generated in a new business is regarded as acquired at a cost and subsequently passes to an assessee in any of the modes specified in sub-s. (1) of s. 49, it will become necessary to determine the cost of acquisition to the previous owner. Having regard to the nature of the asset, it will be impossible to determine such cost of acquisition. Nor can sub-s. (3) of s. 55 be invoked, because the date of acquisition by the previous owner will remain unknown. We are of opinion that the goodwill generated in a newly commenced business cannot be described as an 'asset' within the terms of s. 45 and, therefore, its transfer is not subject to income-tax under the head 'Capital gains'. " This view also corresponds with the view expressed by this court in the case of CIT v. Anglo-India jute Mills Co. Ltd. [1981] 129 ITR 352. We must, however, observe that this decision was rendered on June 9, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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